Despite a Beat, Shares Sag — Microsoft Earnings

Despite a Beat, Shares Sag — Microsoft Earnings

Microsoft reported earnings of 95 cents a share on sales of $26.82 billion, well ahead of the expected numbers of 85 cents and $25.88 billion. So this edition of Short Takes will focus on what we've learned about Microsoft's earnings since the announcement. Investors should also be pleased to note that this innovation hasn't hurt the company's bottom line.

Of course, challenges remain, cyber-attacks and security issues continue to be a major concern for the cloud business, but a vision of Microsoft's post-Windows future is clearer than ever. And ... they didn't really address it yet.

"In Q1, we saw increasing momentum".

Marketwatch has the details on Microsoft's strong quarter. Looking forward, what Microsoft is trying to do is transition as many customers as possible to Microsoft 365, which includes Windows 10 plus Office 365 and Intune/management capabilities. Microsoft said Surface revenue grew 32 percent, the only caveat being that the prior year was impacted by "product end-of-life-cycle dynamics".

Microsoft is building its main products and services on the same architecture. Instead, it's only saying that previous year was low due to product end-of-life. Microsoft's strategies across the board are paying off, and in a big way.

Gaming increased by 18% (16% CC), and that's due mainly to Xbox software and services growth of 24% (21% CC).

A better name than that, for starters.

Microsoft shares were down a fraction in after-hours trading on the stock market today. And you see that even in the way customers use it.

Microsoft is constructing themselves a dependable money-making machine, powered by the cloud and subscription-based productivity software. In fact, Microsoft says that Office 365 commercial seats grew by 28%. Needless to say, cloud services were mentioned a lot during Microsoft's earnings call, with the company planning on integrating the tech into nearly everything they do.

Despite the growth in gaming and hardware sales, Microsoft's cloud and office products still remain the core component of its revenue, bringing in $7.8 billion and $9 billion respectively in the last quarter.

AWS continues to be the prime money maker for Amazon.

Amazon CEO Jeff Bezos picked out AWS' performance in the earnings release, taking a subtle swipe at the firm's competitors.

Sorry, again? It's been going gangbusters for years. Overall, Productivity and Business Processes accounted for $9 billion in revenue, a 17% (14% CC) increase year-over-year.

Amid Microsoft's growing cloud services revenues, the company also is lifting its cloud gross margins - a clear sign that the company is effectively balancing CapEx expenses with recurring revenue growth.

"Day one" being "three weeks ago".

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